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I will move on to retail. I wonder whether we are sufficiently concerned about the impact of Covid on the retail sector, considering that 10 per cent of employment stems from retail and associated industries, and the sector is the largest source of private sector employment. That is coupled with the fact that online sales, as a proportion of retail sales, have increased by about 50 per cent. According to the Office for National Statistics, about half of those sales are from—I love this euphemism—“non-store retailing”; I think that we all know which big non-store retailer, whose name starts with an A, that probably refers to, at least in terms of the lion’s share.

In addition, furlough is coming to an end. Are we about to see a cliff edge for our high street retailers? If their trade is currently down by 20 or 30 per cent, as current figures show, that is not sustainable, is it? What are the consequences of that?

I will go to Mr Robertson first.

Surely not.

Kevin Robertson alluded to the need to examine the non-domestic rates situation. I completely agree with that view. Do you agree with the assessment that the fundamental problem is that non-domestic rates do not reflect the balance of trade—specifically retail trade—in the economy, and that non-store retailers are simply paying rates for having a warehouse rather than rates that reflect the fact that they are selling directly to consumers? Further, fundamentally, those rates are only notionally connected to rent—essentially, the assessors come up with a rateable value, but there is no direct correlation to what people are paying in rent. That means that we have a system that is broken and is a potential impediment to recovery in the sector. Do you think that I am overegging the situation, or do you agree with that position?

We agree that there needs to be an alternative. We need to think about what that looks like in the longer term, but are there also steps that should be taken in the shorter term? In the longer term, what should we be using as the basis for taxation? Should there be some sort of generalised sales tax? Should rent be taxed directly? Should it be landlords who are taxed rather than tenants? I know that your response to that question will be no, but I thought that I would put it out there nonetheless.

Finally, is there something that we can do in the short term to address the issues around online retailers? For instance, could we create a new category of retail or warehouse premises that would enable us to use the existing, albeit imperfect, regime to tax the massive increase in sales that the non-store retailers have experienced over the past 18 months?

I will resist the temptation to have a rant about the revaluation process—I will leave that for another day.

Finally, I ask Joanne Walker whether she has any thoughts or observations on the need for reform of non-domestic rates or any views about what should replace them.

I will take a step back. Covid has been, to use an overused word, unprecedented. We have seen all sorts of situations that we have never seen before. We have also seen a creative use of resource, and indeed policy. For example, we saw the eradication of rough sleeping through the direct action of using hotel rooms. I spoke to the chief executive of a charity that works in that field, and their key observation was that direct action had taken place that was not hidebound by rules and regulations and which considered individual need. We have seen positive outcomes in many cases because of that approach.

Building on such a lesson, how do we need to do policy differently? Can we learn other lessons from what has happened over the past 18 months now that we are, hopefully, on the other side of the pandemic?

I point members to my declaration of interests. In particular, I am a director of a company with retail interests. I am also a trustee and vice chair of the ADHD Foundation charity.

I ask for clarification on declarations of interests from the secretary to the commission. Is it relevant to declare any governance or, indeed, audit roles with external organisations that we might have? Members might want to reflect on making those declarations.

I request that members reflect on whether they have any audit or governance roles with external organisations and maybe use the opportunity to declare those now.

Thank you very much for those answers, which provide us with a good overview of the challenges and changes that Covid has brought.

I started with the macro, but I hope that you will forgive me for diving straight into the micro. In looking at your accounts for this year, I see a number of variances that I might expect, such as a decrease in expenditure on stationery and an increase in information technology spend, but two line items jump out at me, the first of which is a 44 per cent increase in rent and rates. I would like an explanation of that, because it is quite a large increase not only in percentage terms, but in actual terms, especially at a time when people were using buildings less. I am keen to understand why that occurred.

Likewise, expenditure on staff recruitment was up by 44 per cent. That might not be a significant amount in actual terms, but I would be concerned if that indicated underlying staff churn. I would be interested in an explanation of why staff recruitment costs increased so significantly in the year.

I begin by asking the big question. Covid-19 has clearly disrupted life over the past 18 months, but it strikes me, and has been alluded to by Professor Alexander and Stephen Boyle, that it has had a fundamental impact on how Audit Scotland conducts an audit. I always think of auditing as requiring some level of being able to eyeball and assure that what is on the accounts is actually there. If you are working remotely, it strikes me that that is fundamentally disrupted. In broad terms, how has that impacted your ability to conduct an audit?

More important, we are all aware that Covid-19’s impact is not just temporary, but is likely to alter how we work in long-lasting ways. Which of the changes that you have made this year do you see persisting? What impact will that have on the way that Audit Scotland organises itself in the future?